Will I get a reduced Social Security payment?

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mcse37
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Will I get a reduced Social Security payment?

Post by mcse37 »

I'm 61, and plan on drawing Social Security next year. According to my profile on the Social Security web site, they "estimate" my benefit at 1525 dollars per month. But, I haven't worked in the past seven years. Should I expect a smaller payment? If so, how much? Thanks.
Gryphon
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Re: Will I get a reduced Social Security payment?

Post by Gryphon »

If you haven't had any income the last seven years, your estimated SS benefit should already be taking that into account. Have you checked your earnings record on the SS website to verify that it is correct?

When I retired, my estimated SS benefit dropped over the next couple of years as SS started assuming I wouldn't have any future income. The same thing should have happened to your SS estimates years ago when your income dropped to 0.
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Kenkat
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Re: Will I get a reduced Social Security payment?

Post by Kenkat »

Also realize that if the $1525 is your benefit at full retirement age, you benefit at 62 will be about 30% less.
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Candor
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Re: Will I get a reduced Social Security payment?

Post by Candor »

Once your income dropped to $0 SS assumed that all future income would be $0 so it should be fairly accurate. You will get a bit of a raise due to the recent COLA increase.
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BigLaw Survivor
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Re: Will I get a reduced Social Security payment?

Post by BigLaw Survivor »

If you haven't worked in 7 years your not working was definitely taken into account in the calculation. As a PP has noted, though, you'll still be 5 years before full retirement age at 62, so you need to confirm that that amount is for early retirement and not full.
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JoeRetire
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Re: Will I get a reduced Social Security payment?

Post by JoeRetire »

mcse37 wrote: Sat Oct 16, 2021 9:53 am I'm 61, and plan on drawing Social Security next year. According to my profile on the Social Security web site, they "estimate" my benefit at 1525 dollars per month. But, I haven't worked in the past seven years. Should I expect a smaller payment? If so, how much? Thanks.
If you haven't worked in the past seven years, that will be reflected in your work history, and your estimate will be based on $0 income for future years.

Thus, the estimate should be reasonably accurate, if you are reading it correctly. I assume the estimate in question is the "62 years of age" reduced benefits estimate and not your Full Retirement Age benefits?

Consider consulting with https://opensocialsecurity.com/ before deciding to take a reduced benefit.
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goingup
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Re: Will I get a reduced Social Security payment?

Post by goingup »

When you look at your account on the SS.gov site it clearly tells you your benefit amount for Early, Full Retirement, and Delayed. In my case (yours too?) those ages are 62,67, and 70.

If the benefit amount you are seeing is at age 62, it should be the amount you can expect.
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Re: Will I get a reduced Social Security payment?

Post by Outer Marker »

mcse37 wrote: Sat Oct 16, 2021 9:53 am I'm 61, and plan on drawing Social Security next year. According to my profile on the Social Security web site, they "estimate" my benefit at 1525 dollars per month. But, I haven't worked in the past seven years. Should I expect a smaller payment? If so, how much? Thanks.
If you haven't worked in 7 years, presumably you've got other assets and sources of income. If so, consider delaying to increasing your lifetime benefit amount. Can you afford to wait to collect the higher payout at age 67 or 70?
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mcse37
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Re: Will I get a reduced Social Security payment?

Post by mcse37 »

I've thought about delaying my benefit, but my father only lived to 62 and never saw a penny of social security. I'm going to draw as soon as I can.
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Re: Will I get a reduced Social Security payment?

Post by willthrill81 »

mcse37 wrote: Sat Oct 16, 2021 2:07 pm I've thought about delaying my benefit, but my father only lived to 62 and never saw a penny of social security. I'm going to draw as soon as I can.
Think twice. Family history only explains about 25% of individuals' longevity. The rest is due to other factors, particularly your own health and behaviors.

If you didn't collect any SS benefits because you died before doing so, you don't have any regrets because you're dead. But if you live to 90 as many are likely to do, you could have a lot of regret for not delaying your SS benefit to make for a much bigger benefit for the rest of your life.

Delaying SS benefits is like buying insurance. You shouldn't do either to try to get rich; you do so to keep from becoming poor.
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Re: Will I get a reduced Social Security payment?

Post by Outer Marker »

mcse37 wrote: Sat Oct 16, 2021 2:07 pm I've thought about delaying my benefit, but my father only lived to 62 and never saw a penny of social security. I'm going to draw as soon as I can.
That's a fair point if you have reason to expect that your will live a shorter than normal life based on heredity and/or your own personal medical history. But, objectively, it's hard to find a better deal (in fact, impossible) on a lifetime, inflation-indexed annuity. If you have the resources, you can spend more now and forever by delaying until 70. Here's what the math says: viewtopic.php?t=102609
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Re: Will I get a reduced Social Security payment?

Post by delamer »

If you paid into Social Security for 35 years with earnings at the minimum amount (or more) required for credit each year, then your benefit won’t change much due to being out of the workforce for seven years.
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JPM
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Re: Will I get a reduced Social Security payment?

Post by JPM »

Avg life expectancy now for a 62 yo is 20-24 years. If you estimate yourself as below average in health or have any bad health habits, probably less years than that but if not maybe more. If you have low educational attainment probably less, but if you have a higher educational attainment and good current health probably more. The longevity revolution among educated people is a real phenomenon from what I can see. Taking SS early always felt to me like betting against myself, something that I find distasteful.
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willthrill81
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Re: Will I get a reduced Social Security payment?

Post by willthrill81 »

JPM wrote: Sat Oct 16, 2021 3:56 pm Avg life expectancy now for a 62 yo is 20-24 years. If you estimate yourself as below average in health or have any bad health habits, probably less years than that but if not maybe more. If you have low educational attainment probably less, but if you have a higher educational attainment and good current health probably more. The longevity revolution among educated people is a real phenomenon from what I can see. Taking SS early always felt to me like betting against myself, something that I find distasteful.
It's very interesting how people are concerned that they will live to 100 when the topic is safe withdrawal rates, but when it comes to SS benefits, people are concerned that they will die at 65.

:mrgreen:
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JoeRetire
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Re: Will I get a reduced Social Security payment?

Post by JoeRetire »

mcse37 wrote: Sat Oct 16, 2021 2:07 pm I've thought about delaying my benefit, but my father only lived to 62 and never saw a penny of social security. I'm going to draw as soon as I can.
If you expect to die at 62, you won't see a penny, either.

62 is the most popular age at which to start benefits. And few people regret their decision no matter when they choose to start.

If you are single, then you of course can start whenever it pleases you, for whatever reason it pleases you, no matter how much in lifetime benefits you are giving up (and https://opensocialsecurity.com/ can estimate how much you are giving up). Your decision impacts only yourself.

If you haven't worked in 7 years, then apparently you can by without these benefits and so financially could afford to delay. But the choice is always in your hands.
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